Owners of a private company often do not take their company public for the following reasons: – Businesses are required to reveal significant amounts of private financial and business development information, which leads to increased competition. – “Going public” can be an expensive process with ongoing expenses in business requirements, extensive legal involvement, and larger […]

IPOs are sold through exchanges to retail customers and institutional investors by SEC licensed commissioned salespeople. The commission is included in the underwriter’s fee, and is known as a concession. – Retail customers are considered the general public. – Institutional investors, such as banks, insurance companies, and pension funds, are organizations which pool large sums […]

What is a “Lock up Period?” – Most often used in an IPO, it is the predetermined period of time an investor must wait before an investor can liquidate their stock. What is a “Master Limited Partnership” (MLP)? – A publically traded limited partnership with the benefit of publically traded market liquidity. What is “Management […]

What is “Return on Investment” (ROI)? – The profit or loss from an investment expressed as an annual percentage rate (APR). Calculated by dividing profit or loss by total invested. What is “Round of Funding?” – The stage of financing a company is in when receiving funding. For example a company can progress from first […]

Although many entrepreneurs seeking capital approach angel investors, friends or family, or venture capitalists for the money, an alternate source of lending always exists with an investment banker. Investment banking is an alternative lending source where a borrower seeks significant capital for a venture. By definition, “An investment bank is a financial institution that assists […]

What is an “Exit Route?” – The method through which an investor exit an investment. The exit route may occur by the investor taking cash, company debt, What is an “Exit Strategy” for a VC firm? – The way a venture capitalist (VC) or business owner plans to use to get out of a preciously […]

How do you calculate capital gain on stock? – The net sales price less your investment (adjusted tax basis) on the stock. Are capital gains short or long-term? – Capital gains for tax purposes are calculated on assets held for over a year. By specific definition a capital gain is the net increase on any […]

What is an “Accredited Investor?” – Accredited investor is a wealthy investor who meets certain SEC requirements for net worth and income as they relate to some restricted offerings. Who is included in the definition of “Accredited Investors?” – Accredited investors include institutional investors, company directors and executive officers, high net worth individuals, and certain […]

An IPO (Initial Public Offering) or stock market launch is an offering of stock where shares of a private company’s stock are sold for the first time on a securities exchange, like the New York Stock Exchange (NYSE). This process is known as “going public.” A company goes public for different reasons. For example a […]

Funds are Usually Brought Into a Business In the Following Order: 1. Individual personal assets – the money and assets you invest or pledge as collateral. 2. Family and friends personal assets. – the money and assets your friends and family pledge as collateral. 3. Crowdfunding – people from across the USA or the world […]